Monday, July 9, 2012

Last, but definitely not least is the psychology of sports betting.  This is perhaps the most neglected aspect of the industry and it’s something that deserves more attention.  I could probably write an entire book on this topic, but I'll just cover some of the more common biases and issues we all face.

These problems can seriously undermine all of our efforts without even realizing it.

Discipline

NFL Picks Managing Your Psychology 3
Flat-betting not only protects against statistical variance, but it also helps protect us against the pitfalls of our emotions.  It’s one thing to say we are going to bet 2% every pick, but ask someone how rational they are after they just lost a bet on a pick six, another on a dropped pass in the end zone, and yet another on a missed field goal.  All on the same day!

Chances are they are tempted to chase their losses on Sunday/Monday Night Football.  This is a huge mistake a lot of bettors make.

The biggest advantage we have on the sportsbooks is to pick and choose which games we play. Oddsmakers don’t have that choice. They have to put up line on every game on the board.  Therefore, don't hesitate to take a pass on a prime-time game if you don't think you have an edge.

The same applies if they were on the winning end of all of those games. They are feeling on top of the world with an inflated bankroll.  The temptation to let more ride on that night game is very real.

However, it’s vital that you trust your picks and resist these urges to chase the big hit/parlay or throw your profit away on a bad bet.

Losing Sucks!

I’m not going to sit here and preach about anger and frustration because nobody likes losing.  In fact, there have been studies done that conclude that people hate losing three times more than they enjoy winning. 

What I will say is that we shouldn't allow these negative emotions to dominate our betting experience no matter what our goals are.  If it is no longer profitable or entertaining for you – consider doing something else.

Don’t overreact to a bad outcome. Peaks and valleys are inevitable.  Bad beats are a fact of sports.  But so are good beats.  In fact, we should have more bad luck than good luck if our picks are any good.

"I got a gut feeling on this one"

NFL Picks Managing Your Psychology 2Another emotional pitfall in the betting landscape is your “gut instinct”.  Go walk into any casino and take a look around.  How many of these people think their “gut instinct” is working for them?

I’m not saying you have to be a robot, but keep the emotional picks to a minimum and reduce your bet size.

Losing is a Tool of Success

Instead try to learn from losses. Why did the pick lose?  What can you improve for the future?  Track your bets and analyze what went wrong.  You can turn losing into a positive if you gain valuable information from it. 

Burnout

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Burnout is also a real problem with some bettors.  Don’t forget to manage your time effectively.   Don’t let your handicapping or sports betting reduce your quality of life.  

It can be a lot of work picking games, monitoring odds, watching different sports, exchanging information, etc.   If other areas of your life begin to suffer, re-evaluate your goals.

Biases/Fallacies

Finally, here is a list of common psychological concepts that contribute to our betting mistakes.   Self-awareness is empowering…and profitable.

Gambling fallacy – assuming a win is “due” after a string of losses and vice versa.

Hot-hand fallacy – assuming another win is going to come after a previous streak of wins.

Self-Serving Bias – claiming more responsibility for successes than failures by taking personal credit for wins and blaming situational/external factors for losses.

Confirmation Bias – selectively seeking out information to justify your picks while ignoring other relevant information.

Illusory Correlations – seeing relationships in data that one is expecting to see when in fact no relationship exists.

Mistaking correlations as causal relationships – we see this all the time when people reference “trends”.   Anyone can produce a trend and make it sound important, but if they can’t explain it then it is nothing more than random noise.

Overconfidence – humble pie is a fact of handicapping.  Most bettors overestimate their edge.   

Anchoring – putting too much emphasis on one piece of information. This usually comes into play when we are handicapping the games or creating power rankings.  Weighting different factors is always a tricky process.

Framing – having a restricted view on the explanation of results.  Always be willing to learn.  The NFL is not the same game it is today that it was 10 years ago--or even 5 years ago! 

Hindsight Bias – claiming that they “knew it all along” after the fact.